EFFECT OF CORPORATE CULTURE ON GLOBAL MARKETING

ORGANIZATION` AT L’OREAL EAST AFRICA LIMITED IN

KENYA

PERIS W. WANJAU

A RESEARCH PROJECT SUBMITTED IN PARTIAL

FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

DEGREE OF MASTER OF BUSINESS ADMINISTRATION,

SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI

NOVEMBER, 2015

ii

DECLARATION

This project is my original work and has not been presented in any other university or any

institution of higher learning for an award.

Signed: …………………………….. Date: ………………………

Peris Wanjau

D61/72845/2012

The project has been submitted for examination with my approval as University

Supervisor.

Signed: …………………………….. Date: ………………………

Prof. Martin Ogutu

Associate Professor, Department of Administration

School of Business

University of Nairobi

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DEDICATION

This project is dedicated to my dear parents Mr. & Mrs. Wanjau for their unending love

and for all the sacrifices they made to ensure that I got education. To my other family

members and friends, I say thank you for your support. I am truly grateful.

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ACKNOWLEDGEMENT

Above all, thanks to the Lord Almighty for His grace, I look upon Him always. I deeply

appreciate my supervisor, Prof. Martin Ogutu of the School of Business for the

unwavering support and academic advice as my supervisor. Every correction made me

stronger academically. My sincere gratitude goes to all lecturers at the School of Business

for the academic support they gave me.

I would not forget the contribution of my employer and the management at L’Oreal East

Africa for making time to respond to my interview questions despite their tight schedules,

this has helped in expediting completion of this research study.

My classmates, friends and colleagues, I would say thank you for your unwavering

support and class contributions through group discussions and class presentations.

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TABLE OF CONTENTS

DEDICATION.................................................................................................................. iii

ACKNOWLEDGEMENT ............................................................................................... iv

ABSTRACT .................................................................................................................... viii

CHAPTER ONE: INTRODUCTION ............................................................................. 1

1.1 Background of the study ............................................................................................... 1

1.1.1 CONCEPT OF CULTURE ............................................................................................. 2

1.1.2 CORPORATE CULTURE.............................................................................................. 3

1.1.3 GLOBAL MARKETING ORGANIZATION ...................................................................... 5

1.1.4 L’OREAL EAST AFRICA LIMITED ............................................................................... 6

1.2 Research problem.......................................................................................................... 7

1.4 Value of study ............................................................................................................... 8

CHAPTER TWO: LITERATURE REVIEW .............................................................. 10

2.1 Introduction ................................................................................................................. 10

2.2 Theoretical background .............................................................................................. 10

2.2.1 SYSTEMS THEORIES ............................................................................................... 10

2.2.2 THE FUNCTIONALIST MODEL .................................................................................. 11

2.2.3 THE STRUCTURAL FUNCTIONALIST MODEL ............................................................ 11

2.2.4 THE ECOLOGICAL ADAPTATIONIST SCHOOL ........................................................... 12

2.3 Importance of corporate culture .................................................................................. 12

2.4 Types of global marketing organization structures ..................................................... 14

2.5 Corporate culture and organization of global marketing ............................................ 16

CHAPTER THREE: RESEARCH METHODOLOGY ............................................. 18

3.1 Introduction ................................................................................................................. 18

3.2 Research design .......................................................................................................... 18

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3.3 Data collection ............................................................................................................ 18

3.4 Data analysis ............................................................................................................... 19

CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION ................ 20

4.1 Introduction ................................................................................................................. 20

4.2 Marketing Division relationship with the Human Resource division ......................... 20

4.3 Understanding of corporate culture ............................................................................ 20

4.4 Corporate culture influence on staffing decision in global marketing function ....... 21

4.5 Perpetuation of corporate culture in the company ...................................................... 22

4.6 New Employees Induction on Corporate Culture ....................................................... 23

4.7 Balance Between Corporate Culture and Company Objectives ................................. 24

4.8 Global Marketing Structure ........................................................................................ 24

4.9 Corporate Culture and Global Marketing Structure .................................................... 25

4.10 Global Marketing Organization ................................................................................ 26

4.11 Corporate Culture on Global Marketing Organization Changes .............................. 26

4.12 Effect of Culture on Promotional Decisions ............................................................. 27

4.13 Aspects of Corporate Culture Critical to Determining Global Marketing

Organization ...................................................................................................................... 27

4.14 Auditing of Corporate Culture .................................................................................. 28

4.15 The Future of Corporate Culture............................................................................... 28

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS ......

........................................................................................................................................... 29

5.1 Introduction ................................................................................................................. 29

5.2 Summary ..................................................................................................................... 29

5.3 Conclusion .................................................................................................................. 33

5.4 Limitations of the Study.............................................................................................. 34

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5.5 Recommendations ....................................................................................................... 34

5.6 Suggestions for further research ................................................................................. 35

REFERENCES ................................................................................................................ 36

APPENDICES ................................................................................................................. 40

APPENDIX I: INTERVIEW GUIDE .......................................................................... 40

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ABSTRACT

Corporate culture defines the core set of attitudes and practices shared by members of the

firm. Culture therefore gives an organization a sense of identity and determines through

the organization’s legends rituals, beliefs, meanings values, norms and language the way

in which things are done around here. This study was a case study. The choice of a case

study is founded on the fact that the unit of analysis is a single firm. Data was collected

by use of an interview guide consisting of ten (10) questions. The data was analyzed

using content analysis. The researcher transcribed the data from the interview and

organized if into topics under which the various issues raised were discussed. The main

aim of the study was to establish the effect of corporate culture on the organization of

global marketing at L’oreal East Africa Ltd. The study therefore looked at Marketing

Division relationship with the Human Resource division, Understanding of corporate

culture, Corporate culture influence on staffing decision in global marketing function,

Perpetuation of corporate culture in the organization, new employees induction on

corporate culture, balance between corporate culture and company objectives, global

marketing structure, global marketing structure and corporate culture, global marketing

organization, corporate culture on marketing organization changes, effect of culture on

promotional decisions, aspects of corporate culture critical to determining global

marketing organization, auditing of corporate culture and the future of corporate culture.

From the study there was significant relationship between marketing division and human

resource division. Due to the transcendent role of the human resource division it was

expected that marketing division’s skill base would result from recruitment activities of

the human resource division. The meaning of corporate culture was generally understood

in relation to values and concepts such as ethics, respect, beliefs, norms and behavior

were common themes indicative of corporate culture. There was interrelationship among

corporate culture, staffing decisions and global marketing function, an indication that

human resource functions and the global marketing organization functions were informed

by certain elements of corporate culture. Corporate culture was generally inculcated

through slogans and ceremonies especially during induction of new employees. The

induction process was done at the head office of the organization and new employees

would be taken through a set of rules and regulations and their role within the

organization as well as on internal corporate culture elements. The organization had

externally oriented values and beliefs and internally oriented values and beliefs, which at

times had a blurred characterization. The effectiveness of their organization was a

function of the values and beliefs held by the members of the organization, and that it

was incumbent upon all the staff members at least to translate core values and beliefs into

action in their areas of operations. The top management indicated that the organization

had working plans that supported effective management of interrelationships of core

values and beliefs espoused by the organization, policies and practices of the organization

and the business environment of the organization.

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CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Corporate culture has been noted to be one of the key determinants of success of an

organization. Corporate culture defines the core set of attitudes and practices shared by

members of the firm (Deshpande and Webster, 1998). Theses shared attitudes and

practices to a large extent determine the direction activities within the firm take and

provide individuals with the norms of behavior in the organization. Organizational

culture contributes to the unique social psychological environment of an organization.

The marketing structure of an organization is the overall structure used by the firm to

plan, implement and monitor marketing tasks. Basically four types of organizational

forms have been identified namely: functional, product, customer groups and the

complex organization. Companies have begun to recognize the importance of

organizational culture in the management of the marketing function. Weitz, Sujan and

Sujan (1986) included organizational culture concepts in their development of a model of

selling effectiveness. Parasuraman and Deshpande (1984) suggested that greater attention

be paid to organizational culture along with the structural explanations for managerial

effectiveness.

The structural functionalist model creates a direct lineage between anthropology and

organization theory. It holds that organizations are systems with goods, purpose and

needs in functional interaction with their environment. The Ecological – Adaptation it

model views culture as a system of socially transmitted behavior patterns that serve to

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relate human communities to their ecological settings. Both models conclude that an

organization’s culture is driven by dynamics in its environment.

L’Oreal East Africa Ltd manufactures and markets haircare and hairstyling products in

Kenya, Uganda, Tanzania, Rwanda, Burundi and Ethiopia. The company operates under

the global banner of L’Oreal Global. Inter consumer products ltd and Nice and Lovely in

Kenya. Being global marketers, culture and the organization inevitably interact at some

point. It is necessary for marketers in global marketing firms such as L’Oreal understand

how culture relates to decisions on organizational structure.

1.1.1 Concept of culture

According to Tucker (1931) culture is a derivative of the verb Colo which means to tend

or to till. Kroeber and Parsons (1958) explain culture as being transmitted and created

content and patterns of values, ideas and other symbolic meaningful systems as factors in

the shaping of human behaviour. Culture consists of patterned ways of thinking, feeling

and reacting, acquired and transmitted mainly by symbols, constituting the distinctive

achievements of human groups including their embodiments in artifacts. Hofstede (2001)

defines culture as a collective programming of the mind that distinguishes the members

of one group category of people from another. The group or category can be a national

society but Hofstede believes that his definition applies also to other collectives such as

regions, ethnicities, occupations, organizations or even age groups and genders.

Culture is sometime said to be a derivative of experience, more or less organized, learned

or created by the individuals of a population including those images or encodements and

their interpretations transmitted form past generations from contemporaries or formed

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by individuals (Schwartz, 1992). This definition of culture contends that at times culture

does not only inform experience, it is informed by it. Spencer –Oatey (2008) states that

culture is a fuzzy set of basic assumptions and values, orientations to life, beliefs

policies, procedures and behavioral conventions that are shared by a group of people and

that influence (but do not determine) each member’s behaviour and his/her interpretations

of the meaning of other peoples behaviour.

1.1.2 Corporate culture

Corporate culture or organizational culture is a widely used term and has a lot of

ambiguities but the common thread in all wages is that it is something cultivated (Wason,

2006). The concept of culture is the climate and practices that organizations develop

around their handling of people or to the promoted values and statement of beliefs of an

organization (Schem, 2004). Schein (2004) highlights that the only thing of importance

that leaders do is to create and manage, culture and that the unique talent of leaders is

their ability to understand and work with culture and that it is an ultimate act of

leadership to destroy culture when it is viewed as dysfunctional.

Culture therefore gives an organization a sense of identity and determines through the

organization’s legends rituals, beliefs, meanings values, norms and language the way in

which things are done around here. An organization’s culture encapsulates what it has

been good at and what has worked in the past. These practices can often be accepted

without question by long-serving members of an organization. One of the first things a

new employee learns is some of the organization’s legends. Legends can stay with an

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organization and become part of the established way of doing things. Overtime the

organization will develop norms i.e. the established expected behavior patterns within the

organization. A norm is defined as an established behavioral pattern that is part of

culture.

Schein (1990) emphasizes that there are visible and invisible levels of corporate culture

(the “ Culture Ice-berg” analogy- the visible levels (surface manifestations) of the culture

Iceberg, incorporate observable symbols, ceremonies, stories, slogans, behaviors dress

and physical settings. The invisible levels of the culture Iceberg include underlying

values, assumptions, beliefs, attitudes and feelings. Often change strategies focus on the

visible levels. Deal and Kennedy (1982) emphasize the more visible levels of culture

(heroes, rites, rituals, legends and ceremonies) because it is these attributes they believe

shape behaviour. But it is the invisible levels that may be of more interest to public

sector organizations in terms of their influence in progressing or impending

organizational change. Rousseau (1990) in his critique of researchers, who concentrate

on a few attributes, proposes a multi layered model which he structured as a ring.

Hatch (1997) suggests that it is important to manage with cultural awareness rather than

to directly manage the culture. Legge (1995) uses the wave of riding the wave to

explain managing culture. The best a surfer can do is to understand the pattern of currents

and winds that shape and direct the waves. Literature offers varied perspectives of

managing culture which all tend to conclude that culture is diverse and complex.

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1.1.3 Global marketing organization

An important aspect of global marketing is the establishment of an appropriate

organization. The organization must be able to formulate and implement strategies for

each local market and for the global market as well. The objective is to develop a

structure and control system that will enable the firm to respond to distinct variations in

each market while applying the relevant experience that the firm has gained in other

markets and with other products. To be successful, companies need to find a proper

balance between these two needs. A number of organizational structures are suitable for

different internal and external environment. No one structure is suited for all situations.

The success of a global strategy will be accurately influenced by the selection of an

appropriate organization to implement that strategy. The structure of an international

organization should be congruent with the tasks to be performed, the need for product

knowledge and the need for market knowledge. The ideal structure of such an

organization should be a function of the products or services to be sold in the market

place as well as the external and internal environments. Theoretically, the way to develop

global marketing organization is to analyze the specific tasks to be accomplished within

an environment and their design a structure that will support these tasks most effectively.

A number of other factors complicate the selection of an appropriate organization

however, in most cases; a company already has an existing organizational structure. As

the internal and external environments change, companies will need to re-evaluate that

structure. The search for an appropriate organizational structure must balance local

responsiveness against global integration. It is important that global managers understand

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the strength and weaknesses of different organizational structures as well as the factors

that lead to change in the structure.

The organizational structure and locus of decision making could be oriented to the

product. The customer, a region or a combination of any or all of the above,

determination of structure of the marketing function is determined by factors such as

resources, organizational intentions, caliber of human resources, environmental dictates

and the type of product.

1.1.4 L’Oreal East Africa Limited

L’Oreal Group is an acclaimed marketer of beauty products for both men and women

and commands presence in nearly all countries in the world. The company operates

seven regional creative product development centres and six advanced research centres

globally. These centers are charged with the responsibility of new product development

in 2013 the company experienced a market growth of about 52% against an overall

market growth for beauty products of 3.8%.

The company manufactures up to 90% of its products in house and has 42 plants

worldwide and 145 distribution centers. L’Oreal prides itself in its commitment to

innovation. In terms of product organization, L’Oreal has six (6) product categories

divided into Hair Colorants, Hair care, perfumes, make-up, skin care and a line dubbed

others which accommodates any brand that doesn’t fit into the specified categories. In

terms of functions, the company is divided into the following divisions; communications,

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CRM, sales, finance, human resources, marketing, operations, research and

merchandising.

1.2 Research problem

Ruekert and Walker (1987) suggest the relatively attention given to consumer than to

organizational issues in marketing in general. Deshpande (1981) identifies culture as the

pattern of shared values and beliefs that help individuals understand organizational

functioning and thus provide them norms for behaviour in the organization Accordingly,

their organization’s culture may be highly relevant for different managerial decisions

within the organization. Some scholars (Jelinek, Smircich and Hirsch, 1983) view

culture as a property of a group or the organization itself, like technology. Others are of

the opinion that it is something that resides within the individual as a function of

cognitive and learning processes. As an individual property, culture is the evaluations

people make of the social context of the organization that guide their behavior. The

marketing structure that a global marketing adopts is a consequence of these cultural

evaluations. In other words the structure of the marketing department of a global firm

will be reflective of the cultural dynamics within the firm.

L’Oreal is one of the leading marketers of beauty products globally by sales and

revenues. The organization of the company is on the basis of a multi division strategy

consisting of consumer products. L’Oreal Luxe, Active cosmetics, professional

products, and the body shop. These divisions co-ordinate relevant activities globally, by

virtue of L’Oreal’s presence globally with 42 plants and 145 distribution centers, the

management has to contend with employment of people of diverse cultural

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backgrounds. In setting the company’s marketing organization corporate culture has to

be taken into account. The company’s corporate culture is guided by the motto” A culture

of Excellence.

Keseyn (2010) studied the influence of corporate culture on the performance of Kenya

Airways and reports that the performance of a company is correlated to its cultural

responsiveness. Kanyoi (2012) found that corporate culture could be leveraged as a

strategy in driving the competitive advantage of a company. Gachanja (2009) in a study

on strategies adopted by manufacturing multinational Corporations to cope with social

and cultural challenges in Kenya concludes that harmonizing corporate strategy and

culture is a fundamental step in addressing cultural diversity within organization’s . This

study answers the following research question. What are the effects of corporate culture

on organization of global marketing within L’Oreal East Africa Ltd?

1.3 Research objective

The objective of this study is to establish the effect of corporate culture on the

organization of global marketing at L’Oreal East Africa Ltd.

1.4 Value of study

This study will be of benefit to the management of L’Oreal East Africa since it will point

out the relationship between corporate culture and global marketing organization

decisions enrich the firm’s decision making on how to factor corporate culture in

managerial decisions.

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The study will contribute to understanding corporate culture especially from developing

countries perspective. Scholars can use the findings to identify further gaps in the

relationship between corporate culture and organizational performance and study them.

The study will inform policy in that in most countries the cultural aspects is introduced

into managerial decisions by way of anti-discrimination policies especially in

employment practices. The findings of the study will shed light on how the practice of

global marketing and Host country policies on discrimination can be harmonized.

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CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

Chapter two contains the theoretical background of the study, a discussion on corporate

culture and marketing organization and the determinants of corporate culture.

2.2 Theoretical background

This study is guided by two theories of corporate culture: The systems theories, the

functionalist model the structural functionalist model, and the ecological adaptationist

model.

2.2.1 Systems theories

Systems theory emphasizes how all parts of the organization (sub systems) ad interested.

These subsystems function together to take resources (input) and produce some kind of

product or service (output). An organization is seen as being more than the sum total of

its individual parts. It is an intricate mechanism where its parts work together to

undertake the processing of a product or the provision of a service.

Systems theory also emphasizes the environment and the effects of other systems upon

the organization in some ways the systems theory is ignite flexible compared to other

theories. It experts the spontaneous intervention by unexpected inter actions rather than

ignoring them. It emphasizes constant assessment and adjustment. Organizations are

expected to act as not only systems but as homeostatic systems that are expected to

11

maintain a relatively stable constant state of balance and if anything destabilizes them

they can survive and regain their balance.

2.2.2 The functionalist model

According to proponents of theory, there is a universal nature to human beings

grounded in a fundamental set of needs, myths institutions and other cultural products.

Organization as socio-cultural systems ought to reflect in their forms structures, policies

and processes, man’s guest for need satisfaction through work and organizational

participation. Organizations are therefore viewed as theatres for playing out man’s needs.

Either the organization adapts its structure and functioning to allow the man to satisfy his

needs through organizational membership or will suffer severe dysfunction and attrition.

The implication of this theory is that in order to function and thrive, organizations should

accommodate in their structures and processes the member’s need satisfaction. This

accommodation will result in varied organizational forms because of the particular needs

dominant at any juncture in time, place and people within the organization.

2.2.3 The structural functionalist model

This theory holds that organizations are systems with goals, purposes and or needs and

are in functional interaction with the environment. Therefore as functional socio-cultural

systems, organizations are not conceived as having a cultural system that may be

different from or discontinuous with its social system nor can organizations have a

culture very different from that of the ambient society. The society is permeated by the

values of ambient society and this close integration is necessary to the legitimation of the

12

organization’s goal and activities. Some theorists (Selzruk:1982, Rheman, 1988) argue

that the basic acceptance of the more generalized values to the society does not preclude

the emergence of a different value system; ideologies, or characters in different

organizations functioning in the same superdinate system as a result of the organization’s

history and past leadership.

2.2.4 The ecological adaptationist school

The concept of culture as a system of socially transmitted behavior patterns that serve to

relate human communities to their ecological settings finds a close parallel in the

contingency theories of various lives and in the recent population ecology theory of

organizational survival and attrition. Organizations are socio-cultural systems that can

take on varied forms, as they adapt to environmental characteristics including social

and political ones, act upon their environments, or a reselected in or out of existence by

ecological circumstances. In that perspective, a society’s culture is but another

contingency factor which may influence the structures and processes of organizations.

As products of dialectic interplay with their environments, organizations will reflect to a

varying degree the values and culture of society, if the influence of contingency factors,

other than society’s values and culture is strong, the organization’s values, beliefs and

meaning systems may diverge substantially from those of the society that begot it.

2.3 Importance of corporate culture

Studies show that certain kinds of cultures correlate with economic performance

(Denison, 1990: Kotler & Heskelt, 1992; Sorensen, 2002) Boyne suggests a link

13

between organizational culture and service improvement. Similarly, Dan (1995) fond

that organizations with an open culture, focusing a change and flexibility and

characterized by creative problem solving and risk taking.

Understanding of organizational culture and cultural types also helps our understanding

of why managerial reforms may impact differently within and between organizations. An

organization with a predominantly internal process culture for example may be more

resistant to reforms aimed at promoting innovation. Dolith and Bouckearh (2004) note

that we should also expect staff in high uncertainty avoidance cultures to be more

concerned with rule following and more reluctant to risk changing jobs both factors of

some importance for those reformers who want to deregulate, bureaucracies and

encourage more rapid job change .

Practitioners in both the private and public actors have come to realize that organizational

change often requires changing the organization’s culture and learning. Zalain (2005)

notes that culture can either facilitate or inhibit institutional transformation depending on

whether or not the existing culture is aligned with the goals of the proposed change. This

is also noted by O’Sonel in terms of culture facilitating innovative initiatives in the

organization and providing a supportive environment for developing enterprising leaders.

Culture is therefore a key battleground in the context of management reform in the

organization simplistic approaches suggests that the old bureaucratic culture of the firm

must be dismantled if it is to competitively forge ahead. It is therefore imperative for the

14

management in global firms to first and foremost appreciate the centrality of cultural

issues in their performance.

2.4 Types of global marketing organization structures

If a company chooses to go global, planning is essential and is one area that business

owners are not disciplined enough to do. Even for those businesses that are already into

global marketing, they may have to organize and re-organize their marketing function

time and time again (Keegan, 2006). Planning as a tool allows the organization to relate

to the future., It is an attempt to control the effects of the internal , external and

customer environments in such a way that the firm can set and meet goals. There are

three levels of planning related to international business: Corporate, strategic or tactical.

Corporate planning is long term and includes generalized goals for the whole firm.

Strategic planning is conducted at the highest management levels and deals with

products capital, research and the long and shot-term goals of the company. Tactical or

marketing planning are specific actions and the allocation used to carry out strategic

goals in given markets.

It is important to factor in internal communication and organizational structure for the

MNC. When choosing organizational structures, companies are guided by, factors such

as size, level of policy decisions, length of chain of command, staff support, sources of

natural and personnel resources, degree of organizational control, cultural differences in

decision making styles, centralization and type or level of involvement. The structure of

the marketing function could be organized so that it is centralized. A fully centralized

15

structure is one with a strong center responsible for key marketing services like branding,

marketing communication, marketing operations and marketing research as well as a

series of business-unit marketing managers who apply centrally-driven marketing

directives. This structure enables economies of scale and is great for maintaining

consistency in brand management decisions.

The hybrid structure exists between a fully decentralized structure and a fully

decentralized structure. It seeks to strike a balance between the scale provided by a

strong central team and the customization possible in division-specific teams. In this

structure, divisional marketing teams report to central marketing and the business unit

heads they are aligned to. The structure has many drawbacks in that co-ordination costs

are high, decision making may be showed down and efforts may be duplicated across

teams.

Decentralized centers of excellence emphasize their autonomy or localization; whether

localization means geographic; business unto or segment based teams. Decisions are

made at that level with a central marketing team handling activities like market

research, web-design and training. There is no chief marketing officer only a group of

experts able to help divisional heads with tasks like branding sales support and digital

marketing.

Ad-hoc structures are relatively rare compared to the other three but they make sense in

certain cases in both of these structure, steams align not to business lines but slightly

16

more ephemeral consecrations like projects and segments. Project-based structures make

sense in organizations where go to market strategies evolve rapidly and highly flexible

teams are required, segment based structures make sense if customer understanding is

key to the business and customer segments are relatively stable across time.

2.5 Corporate culture and organization of global marketing

When Drucker (1954)first articulated the marketing concept ,he noted that marketing

was not really a separate management function but rather the whole organization ought

to be understood from the customer’s standpoint. Indeed Drucker (1954) was forwarding

an argument to the effect that the marketing concept is a shared belief and cultural system

that puts the consumer at the center of the organization’s operations.. Despite the fact that

the organizational culture is central to the marketing management there is deficiency of

literature on its impact in a marketing concept (Ruekert& Walker,1987).

Weitz, Sojan &Sojan(1986) included organizational culture concepts on their

development of a model of selling effectiveness. Parasuraman and Deshpande(1984)

suggested that a greater attention be paid to organizational culture along with its

structural explanations for managerial effectiveness. Deal and Kennedy(1982)

conceptualized a market oriented organizational culture as a construct including the four

components: Organization -wide shared based values supporting marketing orientation,

Organization wide norms for market orientation, Perceptible artifacts of market

orientation and the market oriented behaviors. According to Densetz (1984) corporate

values have long been referred to as the central dimension of an organizations culture and

have been recognized as powerful influences differentiating one firm from another.

17

Corporate values influence organization’s product and service quality, advertising

content, pricing policies, treatment of employees and relationships with customers,

suppliers, communities, and the environment. Organizations will more often than not

adopt a marketing organization that is in line with its corporate culture or one that

furthers it.

Zethaml & Zeithaml (1984) focus on the issue of organizational environmental

adaptation. They discuss environmental adaptation from the knowledge that adaptation

can be in response to both internal and external environments .Within this internal

environment is found corporate culture. Within this environmental adaptation framework,

the authors note that organizations tune up their marketing organization (and in fact other

functions of management) to capture the corporate culture.

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CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter presents the research design, population, data collection and analysis that

were carried out. The researcher has discussed the research design, data collection and

analysis taking into account the topic.

3.2 Research design

This study was a case study. This choice of a case study is founded on the fact that the

unit of analysis is a single firm. L’Oreal East Africa Limited. Case studies have been

reported to be the most desirable when the researcher is focusing on a single unit and

with the intention of raising as much data about that, phenomena of interest as possible

(Churchill, 1995).

3.3 Data collection

Since this is a study, data was collected form one company only. Given the nature of

study, the respondents were; the strategy Director, the Marketing Manager, the Human

resources Director, the Director, sales and the five (5) divisional managers. This gives a

total of nine (9) respondents. The number (9) is considered to be well within the desired

number of respondents for a case study.

Data was collected by use of an interview guide consisting of ten (10) questions.

Interview guided are deemed sufficient when the study is a case study.

19

3.4 Data analysis

Data was analyzed by use of content analysis. Content analysis enables the researcher to

interpret data on the basis of similar arguments. The researcher transcribed the data from

the interview and organized if into topics under which the various issues raised were

discussed.

20

CHAPTER FOUR

DATA ANALYSIS, RESULTS AND DISCUSSION

4.1 Introduction

This chapter presents the research finds and discussions as presented in the research

methodology. Data was collected from respondents based on prepared guidelines. The

objective was to establish the effect of corporate culture on the organization of global

marketing at L’Oreal East Africa Ltd.

4.2 Marketing Division relationship with the Human Resource division

The study sought to find the relationship between marketing division and the human

resource division, if any. Data from the interviewees were analyzed and it was found that

there was significant relationship between marketing division and human resource

division. The majority of the respondents viewed human resource division as a useful

component of the organization because it was involved in identification of appropriate

staff for marketing division as desired from time to time by the marketing department.

The respondents also cited the role human resource plays in ensuring the organization

achieved sustained superior performance in the changing business environment.

4.3 Understanding of corporate culture

From the data, respondents thought corporate culture was connected to values such as

teamwork, ethics, respect, beliefs, norms and behavior in the firm. These were the

common themes voiced by the respondents and though they spoke a lot about the

importance of culture most did not define it outside of the scope of values. Nonetheless

21

most participants cited the importance of corporate culture in the formation of work

relationships for implementation of marketing project.

Respondents at the managerial level revealed that they have a set of corporate culture that

employees are required to observe, however it has not been possible to gauge the level of

their understanding and adoption because a lot of focus has been on other matters deemed

to have a greater contribution to corporate profitability. However they indicated that local

communities are usually considered for employment whenever the organization sets up

offices in their locality.

4.4 Corporate culture influence on staffing decision in global marketing function

The respondents indicated that global marketing function influenced staffing decision of

the organization and that corporate culture had also an influencing effect on staffing

decisions, but one of the views expressed by the respondents was that the human resource

department had a policy of recruiting staff based on the right mix of local diversity, and

that this policy was also considered for any recruitment that was undertaken for

operations that were global in nature.

Culture was also cited as an important factor in defining the job types, content and pay in

all the operations of the organization and that the global marketing function was

considered as a very important function and as such a lot more resources were deployed

in it than in other departments and the terms and conditions for employment were

22

normally better than for other departments because of the nature of work involved, and

the non routine nature of the work as well.

Respondents in management levels also expressed similar views concerning the role

corporate culture plays in human resource management practices of the organization,

which they said advocated for teamwork as opposed to individualism parse, but staffs in

the global marketing organization projects were usually allowed more flexibility and

room for innovation. The respondents indicated that it was important how well, and at

what levels, the organization and team members got along when working on marketing

projects, and that social status, age, location, attitudes, experience and individual team

members disposition were all important factors when selecting the team for a global

marketing project. Communication and language use was also considered as an important

element in staffing for global marketing organization.

4.5 Perpetuation of corporate culture in the company

The respondents were required to indicate whether they used slogans, legends or

ceremonies to inculcate corporate culture, and it was noted that slogans and legends were

the predominant choice the respondents in encouraging employees buy-in on the

corporate culture while ceremonies was applied on new staff members during induction

sessions.

Corporate culture was also perpetuated through other methods, as stipulated by the

respondent, such as during the interview sessions, and some of the methods that were

23

singled out included training programs and formal meetings that were held regularly to

review emerging issues in the day to day operations of the organization.

4.6 New Employees Induction on Corporate Culture

Among other functions of the human resource department, it was divulged by the

respondents that induction of new employees included a sensitization session to bring

them up to speed with organizations corporate culture, this would normally take place in

the head office location, and would include senior management perception.

More importantly, the respondents identified key operational units namely the functional,

product and customer groups within which orientation was usually undertaken. In that

way it enabled the organization to prime sub cultural practices within to a greater

beneficial effect.

24

4.7 Balance Between Corporate Culture and Company Objectives

The findings indicate that the organization has a centralized system of operations in

which overall planning is undertaken to inform the main objectives the organization

intends to achieve, which in turn are subjected to corporate culture of the organization in

their formation because it, the corporate culture, defines what is important and what is not

important in the organization according to the views expressed by the respondents.

The findings revealed, further, that the management engages in planning for the short and

long run interests of the organization and those goals are normally set to control the

effects of internal and external environmental changes that impact on the organizations

profitability. The respondents indicated that they have a well developed corporate plan

that includes generalized goals and identifies capital, research direction and the long and

short term goals of the company, and tactical marketing goals specific to a certain region

or location.

4.8 Global Marketing Structure

The findings indicate that the organization operates in a global scale and has different

strategic approaches for local and the global markets. In the view of the respondents the

objective is to develop a structure and control system that enables the organization to

respond to distinct variations in every market and at the same time be able to apply the

relevant experience that the organization has acquired in other markets and with other

products as well.

25

One of the key approaches that the organization as adopted in the development of its

global marketing organization includes the analysis of specific task to be undertaken

within an area and therein putting in place a structure that has the capacity to effectively

support the activities generated within the area. The findings also indicate that long

existing organization structure also play a role in the general global marketing

organization.

4.9 Corporate Culture and Global Marketing Structure

The findings show that corporate culture had significant influence on the degree of global

marketing structure orientation. The respondents noted that various value sets,

assumptions, beliefs and norms associated with community groups that are within its

employ affected teamwork because they have different ways of perceiving the world that

is conditioned by their cultural make up as a result these tended to permeate into the

global marketing structure in certain ways that were not evident most of the time to the

management.

The respondents indicated an understanding of the value, role and potential of corporate

culture in creating superior offerings to the customers. This is consistent with the

character of employees that the organization is keen to see work for it: employees that

engender competitiveness, goal achievement, decisiveness, goal orientation, productivity,

competitive advantage and market superiority. The findings also highlight the presence of

some elements of internal process culture, like bureaucracy, that does not reflect

conformity to the dynamic nature of the environment.

26

4.10 Global Marketing Organization

The respondents indicated that the organization had a global marketing practice that was

dictated by the local, regional and global variables, and that each local market and the

global market had a way of formulating and implementing its own strategies. And that

the objective of having that kind of arrangement was to enable the organization to

develop a structure and control system that would ensure it is able to respond to distinct

variations in each market and also to enable it to apply the relevant experience that the

organization has gained in other markets and with other products to enhance its overall

effectiveness in global marketing organization.

4.11 Corporate Culture on Global Marketing Organization Changes

The respondents indicated that whenever there were changes in the marketing

organization, its effect would generally be felt to the extent of the area that the proposed

change covered. And that such a change would, under normal circumstances, not affect

the overall corporate culture but only those within the project focus area.

Project focus area according to the respondents entailed unique communication systems

and channels and as such effective communication between people from different cultural

and linguistic backgrounds often raised challenges because of differences in ideas,

attitudes, assumptions, perceptions, and ways of doing things and so the chances of

miscommunication are considerable. The respondents indicated that the organization

some times adopts as a business strategy some of the local cultures so as to ensure its

goals blend with the aspirations of the local communities.

27

4.12 Effect of Culture on Promotional Decisions

The findings indicate significant influence of corporate culture on promotional decisions

of the organization. Respondents indicated use of language, visual appearances and

presentations that reflected both the corporate culture and target customers’ cultural

orientations. The strategy of the organization, based on the respondent’s views, was to

enhance customers’ responsiveness to the products that it was offering to the market. The

respondents noted that marketing efficiency of the organization depended on adopting a

market orientation culture. The organization also viewed projection of its culture through

appropriate marketing programs was an important aspect to its well being and success.

4.13 Aspects of Corporate Culture Critical to Determining Global Marketing

Organization

The findings indicate that the organization had externally oriented values and beliefs and

internally oriented values and beliefs, which at times had a blurred characterization. The

respondents had a strong awareness that the effectiveness of their organization was a

function of the values and beliefs held by the members of the organization, and that it

was incumbent upon all the staff members at least to translate these core values and

beliefs into action in their areas of operations. The top management indicated that the

organization had working plan that supports effective management of interrelationships

of core values and beliefs espoused by the organization, policies and practices of the

organization and the business environment of the organization.

28

4.14 Auditing of Corporate Culture

The findings indicate that the organization had no formal mechanisms for ensuring that

formal audits were undertaken with regard to the corporate culture, although respondents

were quick to add that some informal consideration of corporate culture audits were

generally raised in the cause of executive meetings, but not as part of the overall agenda.

4.15 The Future of Corporate Culture

Corporate culture was viewed by the respondents as a strategic instrument for the

organization in its overall pursuit of profitability. The respondents further acknowledged

the importance and influence corporate culture has on the organizations products and

services, the quality, advertising content, pricing policies, treatment of employees and

relationships with customers, suppliers, communities, and the environment at large.

29

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter provides the discussions of the findings in the previous chapter in relation to

the statement of the problem and the objectives of the study. The chapter also discusses

the limitations of the study and advances recommendations for policy and practice in the

field of global marketing organization.

5.2 Summary

The main aim of the study was to establish the effect of corporate culture on the

organization of global marketing at L’oreal East Africa Ltd. The study looked at

Marketing Division relationship with the Human Resource division, Understanding of

corporate culture, Corporate culture influence on staffing decision in global marketing

function, Perpetuation of corporate culture in the organization, new employees induction

on corporate culture, balance between corporate culture and company objectives, global

marketing structure, global marketing structure and corporate culture, global marketing

organization, corporate culture on marketing organization changes, effect of culture on

promotional decisions, aspects of corporate culture critical to determining global

marketing organization, auditing of corporate culture and the future of corporate culture.

From the study there was significant relationship between marketing division and human

resource division. Due to the transcendent role of the human resource division it was

expected that marketing division’s skill base would result from recruitment activities of

the human resource division. The meaning of corporate culture was generally understood

30

in relation to values and concepts such as ethics, respect, beliefs, norms and behavior

were common themes indicative of corporate culture.

There was interrelationship among corporate culture, staffing decisions and global

marketing function, an indication that human resource functions and the global marketing

organization functions were informed by certain elements of corporate culture. Corporate

culture was generally inculcated through slogans and ceremonies especially during

induction of new employees. The induction process was done at the head office of the

organization and new employees would be taken through a set of rules and regulations

and their role within the organization as well as on internal corporate culture elements.

A balance between corporate culture and objectives of the organization was exercised

within the planning frame working of the organization. The management engaged in

planning for the short and long run interests of the organization and those goals were

normally set to control the effects of internal and external environmental changes that had

some impact on the organizations profitability. The organization operated on a global

scale and had different strategic approaches for local and the global markets. The

intention was to develop a structure and control system that enables the organization to

respond to distinct variations in every market and at the same time be able to apply the

relevant experience that the organization had acquired in other markets and with other

products as well

31

One of the key approaches that the organization as adopted in the development of its

global marketing organization includes the analysis of specific task to be undertaken

within an area and therein putting in place a structure that has the capacity to effectively

support the activities generated within the area. The long existing organization structure

also played a role in the general global marketing organization

Corporate culture had significant influence on the degree of global marketing structure

orientation. Various value sets, assumptions, beliefs and norms associated with

community groups that were within its employ affected teamwork because they had

different ways of perceiving the world that was conditioned by their cultural make up, as

a result these tended to permeate into the global marketing structure in certain ways that

were not evident most of the time to the management. There was a acceptance that

corporate culture was relevant in creating superior offerings to the customers.

The organization had a global marketing practice that was dictated by local, regional and

global variables, and each local market and the global market had a way of formulating

and implementing their own strategies. Changes in the marketing organization would,

under normal circumstances, not affect the overall corporate culture but only those within

the project focus area. The organization sometimes adopted as a business strategy some

of the local cultures so as to ensure its goals blend with the aspirations of the local

communities.

32

There were significant influences of corporate culture on promotional decisions of the

organization. language, visual appearances and presentations that reflected both the

corporate culture and target customers’ cultural orientations were common approaches

adopted by the organization in its global marketing organization venture. The strategy of

the organization was to enhance customers’ responsiveness to the products that it was

offering to the market.

The organization had externally oriented values and beliefs and internally oriented values

and beliefs, which at times had a blurred characterization. The effectiveness of their

organization was a function of the values and beliefs held by the members of the

organization, and that it was incumbent upon all the staff members at least to translate

core values and beliefs into action in their areas of operations. The top management

indicated that the organization had working plans that supported effective management of

interrelationships of core values and beliefs espoused by the organization, policies and

practices of the organization and the business environment of the organization.

The organization had no formal mechanisms for ensuring that formal audits were

undertaken with regard to the corporate culture, some informal intentions of corporate

culture audits were generally raised in the cause of executive meetings, but not as part of

the overall agenda.

33

Corporate culture was accepted as a strategic instrument for the organization in its overall

pursuit of profitability. Corporate culture had influence on the organizations products and

services, quality, advertising content, pricing policies, treatment of employees and

relationships with customers, suppliers, communities, and the environment at large.

5.3 Conclusion

Various results of the study were subjected to thorough analyses that included effect of

Corporate culture on global marketing organization was analyzed by considering

marketing division relationship with the human resource division, understanding of

corporate culture, corporate culture influence on staffing decision in global marketing

function, perpetuation of corporate culture in the organization, new employees induction

on corporate culture, balance between corporate culture and company objectives, global

marketing structure.

Other analyses included global marketing structure and corporate culture, global

marketing organization, corporate culture on marketing organization changes, effect of

culture on promotional decisions, aspects of corporate culture critical to determining

global marketing organization, auditing of corporate culture and the future of corporate

culture. All the data that was analyzed infer significant relationship between corporate

culture and global marketing organization. As a result, global marketing organization at

L’Oreal East Africa Ltd may be served best when corporate culture is factored in the

global marketing organization strategies.

34

5.4 Limitations of the Study

One of the limitations of the study was the uncertainties associated with the respondents’

responses, and the fear from the management that the study may inadvertently or

knowingly place confidential information about the company, L’oreal East Africa Ltd, in

the hands of its competitors. There was also the element of limited resources available to

the researcher in-terms of funds to enable the study be undertaken in a comprehensive

manner, and this may have had ramifications on time and the necessary labour that may

have been required from support staff

5.5 Recommendations

The researcher recommends that L’Oreal develops more powerful symbols and corporate

insignia that communicates about the culture of the organization to employees. From the

findings,it emerges that even though the company has some corporate culture, that may

not be very clear to most employees. Given that the respondents were senior staff, lack of

appreciation of the organisation’s culture can only mean the problem is more

pronounced.

It is also recommended that there is need for the organization to even more strongly

impute the culture of the organization in the design of organizational structures. Conflict

in organizational design and culture will breed failure in the longterm.

35

5.6 Suggestions for further research

Due to limitation of resources and time, scope of analysis with regard to corporate culture

predictors was limited. It is therefore recommended that other critical elements of

corporate cultures’ effect on global marketing organization be considered for study. The

researcher recommends that further studies be conducted to establish the relationship

between organizational culture and performance since the current study only looks at the

influence of culture on marketing organization. This recommendation is premised on the

belief that there must be some relationship between the two.

It is recommended that further research needs to be done on the entire industry i.e not a

case as the current study is. A survey will probably bring out other relationships that

could not be established using a case study. Future researches ought to be designed with

the data analysis aimed at higher statistical rigour than the current study.

36

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40

APPENDICES

APPENDIX I: INTERVIEW GUIDE

1. Position within company

2. Continents the company operates in?

3. Do you have a marketing Division?

4. How does the Marketing Division relate with the Human Resource division?

5. Describe your understanding of corporate culture

6. How does corporate culture influence your staffing decision in global marketing

function?

7. Do you perpetuate culture by use of slogans?

8. Do you inculcate culture using legends?

9. Do you perpetuate culture using ceremonies?

10. How are new employees inducted on corporate culture?

11. How do you balance between corporate, culture and company objectives?

12. Do you have a global marketing structure?

13. When setting up the global marketing structure, do you consider corporate

culture?

14. Describe your global marketing organization

15. Do you consider corporate culture when changing the Marketing organization?

16. What is the effect on culture on say, promotional decisions?

17. What aspects of corporate culture do you consider very critical when determining

global marketing organization?

41

18. Do you carry out auditing of corporate culture?

19. How frequently is this done?

20. What do you think will be the future of corporate culture?